Leveraged buyout models are often used by private equity firms or venture capital firms as a financial tool to help evaluate “Buy or Don’t Buy” decisions. This model assumes that we will exit in the future at a specific time and that the initial investment will be split between equity (own funds) and debt (borrowed funds). The interest on debt is a tax-deductible expense, which will provide leverage to our capital structure. The debt will be secured by the assets of the compa